Beaconsfield is testing a system in which residents get a tax cut on garbage collection, but have to pay $5 a bag, generating revenues and convincing residents to throw out less, and recycle and compost more. Above: The Lachenaie dump is where 30 to 40 per cent of the garbage in Montreal region is landfilled. Marie-France Coallier / Montreal Gazette

Fundamentally changing the way Canada earns money while protecting the environment at the same time can start with something as simple as Beaconsfield’s project to charge residents for garbage collection based on how much they throw away.

Or Singapore’s water-meter policies. Or London’s congestion tax on cars coming into the city.

This in a nutshell is the raison d’être of a new, privately funded pan-Canadian committee of economists headed by McGill University economics professor Chris Ragan and backed by a who’s who of Canadian politicians and businesspeople. They are looking at ways Canada can follow the lead of other countries and start taxing pollution instead of jobs and profits, without hurting taxpayers or Canadian firms’ ability to compete internationally.

“This is a group of economists who are saying good environmental policy is not only good for the environment, but it’s good for the economy if you do it right, backed up by this advisory board that shows this isn’t a conservative vs. liberal issue, it’s not a business vs. labour issue, it’s just simple middle-of-the-road policy,” Ragan said.

This is a group of economists who are saying good environmental policy is not only good for the environment, but it’s good for the economy if you do it right. — McGill University economics professor Chris Ragan

Canada’s Ecofiscal Commission was launched in November. Privately funded by five family foundations and two corporate sponsors, it’s backed by a cross-partisan advisory board that includes former leaders Quebec premier Jean Charest, prime minister Paul Martin, Reform Party leader Preston Manning and B.C. premier Mike Harcourt along with Suncor CEO Steve Williams. Because it’s privately funded at $1 million annually for a period of five years, the commission can work independently of government interests as it attempts to show government leaders and policy-makers how taxing pollution can be a win-win situation.

On Tuesday, the commission will hold a roundtable meeting at McGill University discussing how “ecofiscality” can bring new revenues to cities, which in many cases hold the keys to developing change.

At present, the Canadian fiscal policy relies heavily on income taxes, subsidies and spending policies. Canadian governments of all levels raise about a third of the national GDP in revenues each year through income taxes, while taxes on environment-related activity amount to just one per cent of GDP. Other comparable countries to Canada in the OECD raise up to five per cent of their revenues from environment taxes, and use that money to reduce taxes on income, employment and profits. British Columbia’s carbon tax cut fuel use in the province significantly, and revenues were directed into income and business tax cuts, as mandated by law.

“There’s lots of countries doing this,” said Ragan, who served as adviser to the governor of the Bank of Canada at Finance Canada. “The United Kingdom does it on garbage and landfill pricing, Denmark does it in terms of carbon pricing, London does it terms of road congestion pricing. And there are two parts to the policies. One part is the price attached to pollution, and the other part is to take these revenues and recycle them back into the economy.”

The International Monetary fund suggested Canada could earn revenues of $26 billion by using ecofiscal policies reflecting damages caused by fossil fuel consumption and traffic congestion. Not to mention savings earned by limiting environmental destruction.

Beaconsfield, where Ragan lives, is testing a system in which residents get a tax cut on garbage collection, but have to pay $5 a bag, generating revenues and convincing residents to throw out less, and recycle and compost more.

Reliance on property taxes

For mayors like Gatineau’s Maxime Peneaud-Jobin, who is on the board of Quebec’s Union des municipalités, the province’s reliance on property taxes has created a monster, spurring cities to promote urban sprawl to gain more taxes, and at the same time creating road and water infrastructure needs it can’t afford.

“In the short term it brings in money, but in the medium term it’s almost catastrophic because we don’t have enough density to pay for the things we need,” he said.

Quebec municipalities are pushing for a percentage of the provincial sales tax, and the right to impose gas taxes to cover public transit, and things like water meters that will convince people to conserve and make large users pay.

The key for governments is to introduce ideas like road congestion or carbon taxes in such a way taxpayers see them as equitable as opposed to a tax grab, Ragan said. The government of British Columbia managed to be re-elected after instituting its carbon tax, he noted.

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Pollution taxes and their effects

Water scarcity in Singapore

With fresh water in limited supply in the urbanized country and demand expected to double by 2060, Singapore introduced a water tax to offset the costs of treating and providing it. The government also introduced a tax rebate for low-income families to reduce the burden. Over 11 years, Singapore achieved a nine-per-cent reduction in water consumption,

London traffic congestion

London’s congestion zone charge debuted in 2003, billing drivers as much as $26 Canadian to drive into certain areas of the city on weekdays, to combat congestion and reduce pollution. Traffic dropped by as much as 36 per cent in 10 years. Funds go toward public transit.

British Columbia’s carbon tax

British Columbia instituted a carbon tax in 2008 to reduce greenhouse gas emissions. Revenues from the tax must be offset with equivalent cuts to personal and business income taxes. Between 2008 and 2013, fuel use dropped 16 per cent in B.C., while it increased by three per cent in the rest of Canada.

Charging more for garbage in the U.K.

The United Kingdom started taxing landfill waste 20 years ago and introduced a cap-and-trade system to reduce garbage dumps that create greenhouse gases and pollute water, soil and air. It helped reduce commercial and industrial landfill waste by more than 40 per cent in five years.

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